Amex Veteran Launches White-Label Bitcoin Debit Card Platform

A new platform for payments processing is looking to capitalize on nascent demand for bitcoin-powered debit card solutions.

Founded in February, Blade Financial is pitching its service to digital currency companies that want to offer debit card services to customers but lack the resources or capabilities to actually launch a product. Such offerings have proved problematic for some startups, and for Blade, this uneven track record is a big business opportunity.

CoinDesk spoke with CEO Ed Boyle, who has previously served as general manager for American Express' prepaid cards unit. Boyle said that the Blade team has decades of experience launching similar products and hopes to leverage this expertise to provide debit cards to an industry he described as very interested in such a solution.

Boyle noted that for many digital currency companies, the act of issuing a debit card is fraught of complications, most notably the cross-jurisdictional legal and compliance hurdles that arise during the process.

He explained:

“To deploy a card against that is extremely difficult. You have to figure out the bank partner, and the laws, for every single country. It just doesn’t seem to make sense to us if there are 20 or 30 companies that want to do this separately trying to figure this out.”

Boyle boasts that his team has the capability to solve that challenge, arguing their expertise in payments solutions and card products puts them in a position to sidestep the hurdles involved.

A middleman solution

While the project is still taking shape, the system Boyle described effectively creates a data transaction layer between a bitcoin company and a card issuer by way of a custom API.

According to Boyle, the process of selecting card networks is still underway and conversations with potential customers remain in progress.

"The reality of that process is that the banks work directly with the payment networks and really we’re, at our core, a technology company that provides connectivity between banks and bitcoin companies," he said.

Boyle explained that the Blade system provides a means for banks to understand transaction data denominated in bitcoin. This means providing connectivity, processing trading requests, settlement instructions and other mechanisms that enable bitcoin to be spent through a credit card network built for fiat currency.

He said that Blade is taking a global approach to building its customer base, arguing that there are bitcoin companies looking to establish either regional or worldwide audiences.

'Great interest' in debit cards

When asked about the bitcoin industry's past efforts to provide debit card solutions, Boyle was optimistic that his company’s approach can solve problems and capitalize on existing demand for such services.

Drawing an example from the wider banking system, Boyle explained that debit cards have increasingly become a facilitator for both storing and exchanging value, making them a commonly understood tool for both putting bitcoin in people’s hands as well as spreading broader adoption.

He told CoinDesk:

"We have the classic chicken-and-the-egg problem of there’s not a lot of users because there aren’t a lot of merchants, and there aren't a lot of merchants because there aren’t a lot of users. We just simply want to take half that equation away and say 'No, we’ve got ubiquitous spending opportunities.'"

Boyle said that a significant number of bitcoin companies that Blade has spoken with are planning a debit card solution, and for the most part want to avoid an in-house development process. He called discussions with bitcoin companies “overwhelmingly positive” thus far.

Blade is hoping to begin servicing B2B customers in the bitcoin space in early 2015, with alpha testing already underway on both the payments processing infrastructure and debit cards themselves.

If all goes according to plan, he said, Blade will begin announcing its first partners sometime in the first quarter of next year.